Calculating Natural Search Value

Marketing, SEO Sep 18, 2008

As a follow up to the post on the Value of Search Engine Traffic, here are some very basic ways to calculate the value of SEO for two types of prospective clients – eCommerce sites and Publishers.

1) eCommerce site (conversion rate x average order value)

Simple Example:

Current conversion rate: 3%
Average order value: $20
New search traffic due to SEO (per day): 8,000 visits *
Total new Revenue from SEO (per day): $4,800

Assuming the client does nothing to improve their conversion rate (i.e. reducing bounce rates, streamlining the buying process), they can expect $4,800 per day in additional sales after doing SEO.

2) Publisher (ad impressions x CPM)

Simple example:

Ad impressions per day: 50000
Average CPM: $5
Ad revenue per day: $250

Projected impressions after SEO: 90000
Projected ad revenue per day: $450

* The simple calculations above don’t account for the difference in click-through rate from securing a #1 position vs #7-10. As you know, the CTR for a top listing is much higher than the CTR for a lower ranking. This should be factored in when you are estimating how much new traffic your company can deliver for a client.

An alternative approach that HitTail Premium uses is to measure natural search traffic based on the Cost per Click values from Google AdWords. For example, we can count the number of visits to your site as a result of organic search and multiply that number by your average CPC to come up with a monetary value for that traffic. While this isn’t completely accurate given the variance in keywords and their respective prices, but it does give you a ballpark estimate on how much money your search traffic is worth.

These exercises are useful to show the opportunity cost of NOT doing SEO. Often times, winning SEO business is a matter of showing an executive how much money they’re leaving on the table by NOT doing SEO.

Feel free to add in comments on other ways to assign a monetary value to search traffic for different types of companies beyond Publishers and eCommerce sites.

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